The number of electric vehicle models eligible for a popular $7,500 consumer tax credit fell sharply as new rules from the Biden administration kicked in on Jan. 1.
Narrower criteria reduced the number of qualifying models to 13 from about two dozen, according to federal data from fueleconomy.gov. The new rules exclude from the tax credit vehicles that use battery components made by Chinese manufacturers.
Treasury Department spokeswoman Ashley Schapitl said the government has been closely coordinating with companies on the new restrictions.
“Automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States,” she said.
Treasury Department rules unveiled last month target battery components made by any company that is subject to Chinese jurisdiction, or is at least 25% owned by the Chinese government. In 2025, the restrictions will expand to include suppliers of key raw materials for batteries, such as nickel and lithium.
Among the vehicles still eligible for the consumer credit are the Model Y by Tesla Inc., Rivian Automotive Inc.’s R1T pickup truck, Stellantis NV’s Jeep Wrangler 4xe and Ford Motor Co.’s F-150 Lightning pickup truck.
The new requirements were included in President Biden’s signature climate law at the behest of Senator Joe Manchin, the West Virginia Democrat who provided the pivotal vote on the Inflation Reduction Act. Manchin had voiced concern that U.S. taxpayers were subsidizing batteries made in China.
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